CSR – Set-off of Excess Amount Spent

## Set-Off of Excess CSR Spending

When a company spends more than the mandated 2% of average net profits on CSR in a financial year, it is permitted to carry forward and set off the excess amount.

### Key Rules

• Set-off window: Excess may be set off against the CSR obligation of the immediately succeeding 3 financial years.
• Conditions to be satisfied (both must apply):

1. The excess amount available for set-off shall NOT include any surplus arising out of CSR activities (e.g., interest, sale proceeds from CSR projects).

2. The Board of Directors must pass a Board Resolution authorising such set-off.

### Why this matters

This encourages companies to spend more than the minimum in any given year without the worry of the additional spend being lost. The conditions ensure that the surplus generated from CSR (which belongs to the CSR pool itself) does not get diverted into a 'set-off cushion' for future obligations.